MAKATI CITY, 23 June 2020 – Credit Information Corporation (CIC), the country’s sole public credit registry and repository of credit information, underscored anew the need for insurance companies, mutual benefit associations, and other similar entities supervised by the Insurance Commission to submit basic credit data of their clients pursuant to Republic Act No. 9510 or the Credit Information System Act (CISA).

In its Letter-Circular No. 2020-03, CIC cited RA No. 9510 which defined credit facility as “any loan, credit line, guarantee, or any other form of financial accommodation from a submitting entity.”

The law likewise classifies insurance companies and mutual benefit associations as submitting entities required to submit current, objective, factual, and basic credit data of their data subjects to CIC, similar to banks, quasi-banks, trust entities, investment houses, financing companies, cooperatives, microfinance institutions, credit card companies, and government lending institutions.

PLIA petition and court decision

The reiteration comes despite the issuance also citing the Petition for Declaratory Relief filed by the Philippine Life Insurance Association (PLIA) Inc. which is pending in the Regional Trial Court (RTC).

“Last year, the RTC declared that premium payments, insurance contracts, and policy loans are not within the ambit of basic credit data. The case is still pending and is not yet final and executory as we have also filed a Motion for Reconsideration,” CIC President and CEO Jaime Casto Jose Garchitorena stated. “In the meantime, other credit facilities that are not covered by the court’s decision are still within the coverage of R.A. No. 9510 and are still a matter of compliance to the CIC.”

The latest CIC issuance enumerated the reportable transactions not indicated and nullified by the RTC decision including real estate mortgage loans, collateral loans, chattel mortgage loans, housing and car loans, salary loans other than the insurance company’s employees except those extended in the regular course of business, salary loans to public education teachers, employee/emergency loans, multi-purpose loans, agency financing plans, director’s loans, and commercial loans.

The letter-circular was likewise issued at the heels of potential restructuring activities by micro, small, and medium enterprises (MSMEs) and individual borrowers affected by the COVID-19 pandemic when people need proof of their creditworthiness.

More information for everyone’s benefit

The state-run credit registry trusts that a credit report is a valuable tool even for insurance companies as credit information allows improved risk assessment of their potential clients.  

Garchitorena added that since premium payments, insurance contracts, and policy loans are currently not being submitted to CIC, insurance companies and mutual benefit associations that will register as accessing entities will not be able to use the CIC Credit Report in assessing applications for the same products.  

CIC’s charter also provides that it can identify the types of data that may speak to the creditworthiness of an individual including the regularity of payment behavior which constitutes positive credit information. This is especially useful during the pandemic.

“COVID-19 has emphasized the need for access to formal credit. The need for data beyond banks and traditional sources of credit data is even more pronounced in the Philippines where majority of our population is still unbanked. We hope that after the first wave of building up the CIC database, we can start expanding our coverage to other data sources,” CIC’s SVP for Business Development and Communications, Atty. Aileen Amor-Bautista, explained.   

The SVP further spoke on the value of having comprehensive data in one’s credit report: “The ultimate goal of the CIC is to help borrowers and lenders work out the best deal for each other through a transparency that credit data can provide. In the time of COVID-19 and post-community quarantine economic challenges, lenders will be looking for good reasons to assist their clients in restructuring loans, while borrowers will be making the case to be considered creditworthy. The more data available to the lender and borrower, the more likely an equitable and meaningful restructuring can occur.”

In the end, the CIC PCEO and SVP enjoined insurance companies and mutual benefit associations to contribute to building a comprehensive and reliable credit information system within the current conditions set by the court.

“This will be for everyone’s benefit,” the PCEO assured.